State Bank of India will issue preferential shares to the Central government at Rs 2,191.69 per share to raise about Rs 7,900 crore. The executive committee of the central board of SBI at its meeting on Thursday approved the offer price.

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The SBI stock closed up 0.15 per cent at Rs 2,261.25 on the BSE ahead of the news. The government is injecting funds into SBI by subscribing to its shares as part of a move to shore up the capital base of state-run banks eroded by fast growth and worsening asset quality.

With the capital infusion,the government stake would go up to about 65 per cent.

At present,the Government of India holds 59.4 per cent stake in SBI. The capital infusion by the government will raise tier-I capital of the bank to about 8 per cent.

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As of September 2011,the capital adequacy ratio of SBI stood at 11.4 per cent. Of this,tier-I capital stood at 7.47 per cent at the end of second quarter against the minimum 8 per cent level desired by the government.

Last year,SBI had submitted a proposal to the government for raising Rs 20,000 crore through a rights issue to fund its growth plans over the next two fiscal years.